On the heels of the recent Executive Order issued by the Biden Administration urging the Federal Maritime Commission (FMC) to step up enforcement of Shipping Act violations, U.S. manufacturer, MCS Industries—a maker of household furnishings—has filed a formal complaint accusing two ocean carriers of failing to honor their service contracts. The allegations include abandonment of agreed allocation under their contracts that forced MCS to look for space on the spot market where they had to pay exorbitant rates to move their product.
MCS experienced this misconduct by global ocean carriers firsthand, in a stark break from pre-pandemic practice where several ocean carriers refused to negotiate or provide service contracts to MCS. Those that did provide such service contracts, refused to provide more than a fraction of the cargo capacity that MCS requested and needed.
The case goes on to cite the use of blank sailing that deprived shippers of capacity, creating artificial scarcity, and boosting prices on the spot market. Other allegations include discrimination by favoring other shippers willing to pay higher prices with container space, which should have been allocated to MCS in accordance with their service contracts and failing to negotiate.
What MCS is Seeking
According to the filing, MCS is asking the FMC to issue an order requiring carriers to put in place “lawful and reasonable practices to preclude Respondents from refusing to provide MCS with its allotted space at prices agreed under their respective service contracts with MCS for the remaining terms of those service contracts.”
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